HMRC is bolstering its already rich arsenal against tax avoidance with its ‘serial avoiders’ regime, including naming and shaming, set to come in from April 2017, explains BDO tax investigations partner Dawn Register
The government continues to seek ways to deter taxpayers from undertaking what is perceived to be 'undesirable' and 'aggressive' tax avoidance arrangements (TAAs). In addition, it wants to encourage taxpayers who used TAAs in the past to withdraw and settle their tax position with HMRC now.
The new ‘serial tax avoidance’ regime, created by Finance Act 2016, will increase pressure on all taxpayers to reach a quick settlement on TAAs used in years gone by and avoid future TAAs. A TAA is defined as an arrangement notifiable to HMRC under the Disclosure of Tax Avoidance Schemes (DOTAS).
The title 'serial avoiders' is deceptive because it could apply where a taxpayer did only one scheme. Taxpayers who used one or more TAAs any time before 15 September 2016 will automatically enter the Serial Tax Avoidance regime if one or more of their TAAs are ‘defeated’ after 5 April 2017. This applies even if the TAAs were used to reduce tax on a return many years ago. Herein lay the controversy: for many this is a form of retrospective action, i.e punishment in 2017 for something that may have been done in relative or complete 'innocence' 10 years ago.
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